AWS-3 Auction Temporarily Stealing Thunder From Incentive Auction at FCC

"It sounds like they're going to have more of a framework document, in the timeframe that Wheeler has laid out and then follow that with a series of orders that bite off pieces,” said a wireless carrier executive. “We're all trying to understand how that kind of thing can work, because all these issues are so interleaved.” Several carrier and wireless industry officials said they're hearing the same thing: FCC staffers are working hard on an order, but it’s likely to leave many gaps to be filled in later. Many questioned whether that order is likely before April or May.

An FCC official said Wednesday “many incentive auction issues and policy decisions will be determined” in the upcoming report and order. “Here’s what we can expect: The commission will adopt a framework for the auction in the R&O, seek comment on further specifics about key implementation issues in the auction comment [public notice] and issue final rules in the procedures PN,” the official said. “Any other outstanding issues will be addressed through a process that ensures public input and will conclude well in advance of the auction itself. This will provide the commission with the necessary flexibility to make important initial decisions regarding the structure of an auction and then seek further public input about specifics that are contingent on the policy determinations made in the R&O. Given the innovative nature of the incentive auction, preserving flexibility on implementation details is particularly advantageous and important.”

"It is always the case that the first order is dealing with high-level directional issues, policy issues … but that there is also always an implementation order that deals with many of the sometimes more technical issues,” said Coleman Bazelon, principal at the Battle Group, which provides economic consulting to carriers. “An example of the distinction would be the order will tell us that they're deciding to do, say, a multiple round, descending clock auction for the procurement and that that’s going to require something like a feasibility checker. The details about the feasibility checker, what approach they take, how long before it times out, all that stuff, is an implementation question.”

Bazelon said the initial order likely won’t be able to address all high-level policy questions. “It will have follow-on inquiries in it,” he said. “The high-level decisionmaking will get some direction this spring, but won’t be completed this spring."

"The decision to focus on the AWS-3 auction makes a great deal of sense given that it’s likely to generate the same amount of paired spectrum nationwide as the incentive auction, but with far less complexity and hassle,” said Rick Kaplan, NAB executive vice president and former Wireless Bureau chief. “Most people are completely taken with the incentive auction, but the AWS-3 auction is likely to give the federal government far more bang for its buck at the end of the day,” he said. “To get any kind of order out this spring, I agree that it will have to leave a great deal of questions unanswered. The key issue will be for the commissioners, and not the staff on delegated authority … to vote on each of those subsequent issues. It’s a major auction, and I am confident Congress would like those nominated by the president and confirmed by the Senate making all of the substantive decisions as we move forward."

Former Commissioner Robert McDowell acknowledged the FCC faces a tough challenge on the two pending auctions. “It’s a challenging needle to thread with all of the time pressures to have the AWS 3 auction squared away before the 600 MHz [incentive] auction takes off,” said McDowell, now a visiting fellow at the Hudson Institute. “The two are interrelated and auction players are anxious to have certainty."

"As far as I can tell, this will be the last major auction of good spectrum we may ever do,” said Blair Levin, a fellow at the Aspen Institute and the former manager of the FCC National Broadband Plan. “When I got to the FCC in 2009, there was no plan for any [auction]. It’s good that we actually have one, but it’s so important to get it right and Tom [Wheeler] should take the time he needs.” Levin is now executive director of the Gig.U project to connect municipalities where university campuses are with high-speed broadband.

BTIG analyst Walter Piecyk said the AWS-3 auction should take precedence. “The FCC needs to get the AWS-3 in order before they worry about the incentive auction,” he said. “While the incentive auction is the top priority for the FCC, the focus right now needs to be on getting the AWS-3 auction rules out to keep within the timeline required by the spectrum act."

The FCC is understandably focusing on the AWS-3 auction first, said Jeff Silva, analyst at Medley Global Advisors. “While the incentive auction is larger and more complex than AWS-3, the latter more so than the former faces acute time pressures and has its own unique technical/administrative coordination challenges,” Silva said. “Moreover, there’s also this: the AWS-3 auction is disproportionately important relative to its modest size and to Chairman Wheeler’s competitive agenda because it offers such a strategically significant spectrum acquisition opportunity for the national wireless carrier -- T-Mobile -- with the weakest spectrum position of the field of four. The FCC obviously wants to get the AWS-3 auction right. Doing so will create momentum in advance of the incentive auction and generally should help advance key policy goals of the chairman."

"I have extreme confidence that Chairman Wheeler and his team will make the best possible decision for the wireless industry and the U.S. taxpayer, and they will do it in the most time efficient manner that circumstances allow,” said Steve Berry, president of the Competitive Carriers Association. “There is an old saying, ‘if you want it bad, you may get it bad.’ I want Chairman Wheeler to be supremely confident he has the right policies in place to execute a successful auction. The chairman has been very transparent in his thought process, and I expect he will continue that practice.”

"If it turns out that the auction rules are progressing a bit slower than earlier anticipated -- or hoped for -- I'd cut Wheeler slack on this one,” said Randolph May, president of the Free State Foundation. “Unlike some matters at the agency that drag on way past when they should, getting certain aspects of the auction rules right is complicated business. While undue delay could be problematical, going forward with poorly designed proposals would be even more problematical, especially if taking some more time would likely improve the ultimate auction outcome. So I don’t want to be critical of any delay without knowing more about the work going at the commission that may create the schedule slippage.”